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185 loan to subsidiary Co

Sunil Suthar (41 Points)

20 July 2017

do a company give direct loan to its subsidiary?

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10 Replies

Pooja Mehta (48 Points)
Replied 21 July 2017

any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company;...

Pooja Mehta (48 Points)
Replied 21 July 2017

As per amendments made under section 185 .. company can extend loan to its subsidiary

Sunil Suthar (41 Points)
Replied 22 July 2017

yes loan can be extended but it's through bank or fi in sense holding company can provide security and guarantee but Not direct loan to subsidiary.

Pooja Mehta (48 Points)
Replied 23 July 2017

A holding company can provide loan, security or guarantee to its wholly owned subsidiary company .. Provided the loan so provided is utilised only for its principal activities of the business and not for any other purpose

Sunil Suthar (41 Points)
Replied 24 July 2017

yes But if subsidiary is not wholly owned then what?
direct loan to a subsidiary not wholly owned possible?

Pooja Mehta (48 Points)
Replied 25 July 2017

no not possible as its clearly stated wholly owNed subsidiary

Sunil Suthar (41 Points)
Replied 25 July 2017

then it shall be as per provisions of 186?

Pooja Mehta (48 Points)
Replied 25 July 2017

Yes according to my interpretation .. and
1.the company has to pass resolution for the same
2. it should be within the prescribed limit
3. co. should also intimate to the members by stating in financials of the company